British Columbia Limited (BCL), a privately held company with a December 31 year end, issued $10,000,000 publicly traded bonds on December 1, 2010 for bond proceeds of $8,461,427 reflecting a yield rate of 5% and at which time the Bank of Canada prime rate was 1%. The bonds were dated for release on October 1, 2010 but the underwriter recommended waiting to play the market interest fluctuations. The 10 year bonds have a coupon interest rate of 3% with interest payable at six month intervals, April 1 and October 1. In recording bond issues the company applies a separate discount or premium account, as needed.

Required#1: Prepare the entry to record the bond issue on December 1, 2010.

Required #2: Prepare any required entry at December 31, 2012.

Required #3: Prepare the entry to record the interest payment on April 1, 2013. On October 1, 2018, after the interest payment, BCL went to the open market and retired of the bond issue when the market interest rate was 6%.

Required #4: Prepare the redemption entry. After the partial redemption BCL also decided on October 1, 2018, to adopt fair value for accounting for all financial instruments. At this time the Bank of Canada prime rate had risen to 2.5%. BCL will apply an allowance account in revaluing all of its financial assets and liabilities to fair value.

Required #5: Determine and prepare any applicable entries to report the remaining bonds at fair value.